The Alabama Hospital performs testing in its laboratory. The following standards have been set for each test performed: Direct materials: 2 gallons at $3 per gallon Direct labor: 0.5 hours at $8 per hour Variable overhead: 0.5 hours at $2 per hour During May, the hospital performed 4,000 tests. On May 1 there were no direct materials on hand. Variable overhead is assigned to tests on the basis of direct labor hours. The following events occurred during May: Direct materials purchased: 8,100 gallons at $3.10 per gallon Direct materials used: 7,600 gallons Direct labor used: 2,200 hours at $8.25 per hour Actual variable overhead: $4,175 The hospital applies variable overhead to products on the basis of standard direct labor-hours. The materials quantity variance for May was: $1,200 U $1,200 F $300 U $1,500 F

The Alabama Hospital performs testing in its laboratory. The following standards have been set for each test performed: Direct materials: 2 gallons at $3 per gallon Direct labor: 0.5 hours at $8 per hour Variable overhead: 0.5 hours at $2 per hour During May, the hospital performed 4,000 tests. On May 1 there were no direct materials on hand. Variable overhead is assigned to tests on the basis of direct labor hours. The following events occurred during May: Direct materials purchased: 8,100 gallons at $3.10 per gallon Direct materials used: 7,600 gallons Direct labor used: 2,200 hours at $8.25 per hour Actual variable overhead: $4,175 The hospital applies variable overhead to products on the basis of standard direct labor-hours. The materials quantity variance for May was: $1,200 U $1,200 F $300 U $1,500 F

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter9: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 1CMA: MinnOil performs oil changes and other minor maintenance services on cars and trucks. The company...

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MinnOil performs oil changes and other minor maintenance services on cars and trucks. The company advertises that all services are performed within 15 minutes each. On a recent Saturday, 160 cars were serviced, resulting in the following labor variances: rate, 19 unfavorable; efficiency (time), 14 favorable. If MinnOils standard labor rate is 7 per hour, determine the actual wage rate per hour and the actual hours worked.
During the week of May 10, Hyrum Manufacturing produced and shipped 16,000 units of its aluminum wheels: 4,000 units of Model A and 12,000 units of Model B. The cycle time for Model A is 1.09 hours and for Model B is 0.47 hour. The following costs and production hours were incurred: Required: 1. Assume that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost, and comment on its accuracy. 2. Assume that Model A is responsible for 40% of the materials cost. Calculate the unit cost for Models A and B, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation. 3. Calculate the unit cost for the two models, using DBC. Explain when and why this cost is more accurate than the unit cost calculated in Requirement 2.
The Company conduct the medicine tests in its laboratory. The following standards have been set for each core test performed: Standard hours or quantityStandard price or rateDirect Materials1.5 pounds£0.375 per poundDirect Labour0.2 hours£6.00 per hourVariable manufacturing0.2 hours£4.50 per hour In the month of April, the laboratory performed 2,000 core tests. 4,300 of raw materials were purchased at a cost of €3655. 1.800 litres of material were used for core tests. 420 actual direct labour hours were worked at a cost of £4305. Actual variable manufacturing overhead incurred was €1600. The labour efficiency variance for the month is: A. 240 favorable B. 240 UF C.120 F D. 120 UF
Forfar Engineering performs cement core tests in its laboratory. The following standards have been set for each core test performed: Standard Hours or Quantity Standard Price or Rate Direct materials 3.0 pounds £0.75 per pound Direct labour 0.4 hours £12.00 per hour Variable manufacturing overhead 0.4 hours £9.00 per hour During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand. Variable manufacturing overhead is assigned to core tests on the basis of direct labour hours. The following events occurred during March: • 8,600 pounds of sand were purchased at a cost of £7,310. • 7,200 pounds of sand were used for core tests. • 840 actual direct labour hours were worked at a cost of £8,610. • Actual variable manufacturing overhead incurred was £3,200. The labour rate variance for March is: A £4,578 unfavourable B £1,470 unfavourable C £4,578 favourable D £1,470 favourable
Cox Engineering performs cement core tests in its laboratory. The following standards have been set for each core test performed: Standard Hours or Quantity Standard Price or Rate Direct materials 3.0 pounds £0.75 per pound Direct labour 0.4 hours £12.00 per hour Variable manufacturing overhead 0.4 hours £9.00 per hour During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand. Variable manufacturing overhead is assigned to core tests on the basis of direct labour hours. The following events occurred during March:8,600 pounds of sand were purchased at a cost of £7,310.7,200 pounds of sand were used for core tests.840 actual direct labour hours were worked at a cost of £8,610.Actual variable manufacturing overhead incurred was £3,200.The variable manufacturing overhead efficiency variance for March is: Multiple Choice £320 unfavourable. £360 favourable. £320 favourable. £360 unfavourable.
The loan department of Calgary Bank uses standard costs to determine the overhead cost of processing loan applications. During the current month, a fire occurred, and the accounting records for the department were mostly destroyed. The following data were salvaged from the ashes. Standard variable overhead rate per hour $9 Standard hours per application 3 Standard hours allowed 4,980 Standard fixed overhead rate per hour $7 Actual fixed overhead cost $35,630 Variable overhead budget based on standard hours allowed $18,300 Fixed overhead budget $35,630 Overhead controllable variance $1,000 U (a)Determine the following. (1) Total actual overhead cost $ (2) Actual variable overhead cost $ (3) Variable overhead costs applied $ (4) Fixed overhead costs applied $ (5) Overhead volume variance $ (b)Determine how many loans were processed.
Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $94,500 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities Cost Drivers Total Cost 1. Materials handling Number of requisitions $40,000 2. Machine setups Number of setups 21,500 3. Quality inspections Number of inspections 33,000 $94,500 The cost driver volume for each product was as follows. Cost Drivers Instruments Gauges Total Number of requisitions 400 600 1,000 Number of setups 200 300 500 Number of inspections 200 400 600 (a) Determine the overhead rate for each activity. Overhead Rate Materials handling $enter a dollar amount per requisition per requisition Machine setups…
A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are: Short term Long term Direct Material (lbs 9 21 Nursing labor (hrs.) 2.5 5 Standard price paid for direct materials (per lb.): $ 10.00 Standard rate for labor (per hour): $ 16.00 Variable overhead rate for ICU (per hour): $ 30.00 Fixed overhead rate for ICU (per hour): $ 40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…
A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are: Short term Long term Direct Material (lbs 9 21 Nursing labor (hrs.) 2.5 5 Standard price paid for direct materials (per lb.): $ 10.00 Standard rate for labor (per hour): $ 16.00 Variable overhead rate for ICU (per hour): $ 30.00 Fixed overhead rate for ICU (per hour): $ 40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…
A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are:                                                            Short term                           Long term Direct Material (lbs                                9                                         21 Nursing labor (hrs.)                               2.5                                          5 Standard price paid for direct materials (per lb.): $              10.00 Standard rate for labor (per hour): $              16.00 Variable overhead rate for ICU (per hour): $              30.00 Fixed overhead rate for ICU (per hour): $              40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…
A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are:                                                            Short term                           Long term Direct Material (lbs                                9                                         21 Nursing labor (hrs.)                               2.5                                          5 Standard price paid for direct materials (per lb.): $              10.00 Standard rate for labor (per hour): $              16.00 Variable overhead rate for ICU (per hour): $              30.00 Fixed overhead rate for ICU (per hour): $              40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…
A hospital analyzed their patient data in the ICU and categorized patients into two types: short-term and long-term. The standard quantities of labor and materials for each type of patient for 2011 are:                                                            Short term                           Long term Direct Material (lbs                                9                                         21 Nursing labor (hrs.)                               2.5                                          5 Standard price paid for direct materials (per lb.): $              10.00 Standard rate for labor (per hour): $              16.00 Variable overhead rate for ICU (per hour): $              30.00 Fixed overhead rate for ICU (per hour): $              40.00 **VOH and FOH are applied (used) on the basis of direct labor hours Actual operating data for 2011 is as follows: Total short-term patients: 4,000…